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The minimum wage in Colombia 1984-2001: favoring the middle class with a bite on the poor

Carlos Arango () and Angélica Pachón ()

Revista ESPE - Ensayos sobre Política Económica, 2007, vol. 25, issue 55, No 55, 148-193

Abstract: This paper exploits the long history of the minimum wage in Colombia in order to see whether it has improved the living conditions of low income families and reduced income inequality. This paper also explores how the minimum wage may have distorted market outcomes in the process. We fi nd signifi cant negative minimum wage effects on both the likelihood of being employed and hours worked among household heads. The negative effect is strongest for women, the young and less educated people. For non-head household members, we fi nd that a rise in the minimum wage signifi cantly increases labor participation, reduces hours worked, and increases the likelihood of being unemployed. Most importantly, we fi nd evidence that the minimum wage ends up being regressive, improving the living conditions of families in the middle and the upper parts of the income distribution but causing net losses for those at the bottom

Keywords: minimum wage; income distribution; income inequality; poverty alleviation (search for similar items in EconPapers)
JEL-codes: O15 J31 J42 J48 (search for similar items in EconPapers)
Date: 2007
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